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1) Location


• Southeastern Europe

• Bordering countries include

Greece with 282km, Serbia

115km, and Montenegro 172km,

and Macedonia 151km.

• Also borders the Adriatic and

Ionian Sea. Italian boot heel is to

the west, between the two is the Straight of Otranto. 1

• Italy and Albania re-connected in the 1980’s after WWII, and today seems as though it is

the most important country to Albania, Italy is Albania’s #1 trading partner.

• Relations between Greece and Albania became increasingly strained after the fall of the

communist regime in 1991. Today the relations between the two countries are relatively

good, after the two signed a treaty for peace and friendship in 1996.

• Macedonia and Albania have good relations involving trade, approximately 2 million

Albanians live in Macedonia and they share similar cultures.2

2) Size-comparison:

• Albania is slightly larger than Massachusetts3

 Total Area Albania= 11,100 sq. mi.

 Total Area Massachusetts=


3) Topography and Climate:

The majority of Albania is mountainous with 70% of the land at elevations above 300m

(1000ft). The remainder of the country is comprised of coastal lowlands and other small plains

along the coast. The climate in the northern region has cold wet winters and mild summers. The

coastal areas have hot dry summers and cold rainy winters. The mountainous regions in the

country are generally cooler and wetter than the coastal plains year round. With Albania’s poor

infrastructure it is difficult to transport products throughout the country, especially in the

Northern region (to be discussed further on). The Southern region and mountain ranges are

more accessible and this influences the development of their infrastructure and economic


4) Family Structure:

• 2001 Census found an overall average of 4.46 persons per household.

 Urban – 4.15 persons per household

 Rural – 4.72 persons per household5

• In traditional society, the household consisted of the mother and father as well as their

unmarried daughters, and married sons and their wives and children. The extended

families were quite large. When the father died, the eldest son assumed the responsibility

of the extended family. Upon the death of both parents, all the property was divided

equally amongst the sons. Daughters could not inherit family property.

• Today’s family structure is not that different. Although the family trends are still quite

large, most Albanian families have three children. Even though the extended family is

smaller it is still common for one son and his family to remain at home and take care of

the parents in their older age.6

5) Political Environment & Government Structure:

• Throughout the 1990’s and the end of communism, the political environment has been

shaky and slow to recuperate. For example, in 1997 the State Department released a

travel advisory recommending US tourists immediately depart the country due to

increasing violence from political instability, also all US workers within the country were

flown the US government.7

• Government Type – Emerging Democracy, Multi-Party Republic

• Comprised of Judicial, Legislative and Executive Branches

 Albania has Chief of State who is President, and a Head of Government who is

the Prime Minister.

 Assembly consists of 140 seats.

• Currently the government is slowly beginning and is expected to maintain stability over

the next five years, as Albania continually attempts to join the EU.8

6) Political Relations with the US:

After 52 years without any form of relations, in March of 1991 the United States

and Albania re-established diplomatic and bilateral relations. Later that year in October 1991,

United States built an embassy in the capital Tirana. Since then the US has provided Albania

with over $550 million in assistance, making the US the second largest bilateral economic donor

over Italy. Also, Albania has helped the US in the war on terrorism, by freezing terrorist assets,

and providing military support in Afghanistan and Iraq.9

Albania and the United States signed and ratified several agreements in 2003. Among

these include a treaty on the Prevention and Proliferation of Weapons of Mass Destruction;

Promotion of Defense and Military Relations; and The Adriatic Charter. Also included was an

Agreement regarding the non-surrender of persons to the International Criminal Court. The

United States supports Albania’s EU and NATO membership goals. With Albania moving

towards NATO membership, the US and Albania signed a Supplementary Agreement to the

Partnership for Peace in 2003.

In 2006, Albania opened the doors for the largest foreign direct investment project ever in

Albania, $1.9 Billion! With $600 million being US equipment and services, this is a huge

development in Political Relations between the US and Albania. This project is an “Energy

Field” that will hopefully provide Albania with all of its power and gas needs. The construction

of this project is providing 4,000 jobs over the next 18 months, and huge investment

opportunities for US companies over the next 5 years.10

7) Economic Bases:

• GDP = $20.21 Billion

 Agriculture: 23.3%

 Industry: 18.8%

 Services: 57.9 %

• GNP=$ 5.7 Billion *This graph depicts the sharp increase in FDI


• GDP Per Capita = $5,600

• Balance of Payments:

 Imports - $2.901 Billion

 Exports - $763.2 Million

 Trade Deficit = $2.138 Billion11

8) Chief Imports & Exports:

• Exports – Textiles and footwear, asphalt, metals and metallic ores, crude oil, vegetables,

fruits, and tobacco.

 Export Trading Partners – Italy 72.4%, Greece 10.5%, Serbia and Montenegro


• Imports – Machinery and equipment, foodstuffs, textiles, and chemicals.

 Import Trading Partners – Italy 29.3%, Greece 16.4%, Turkey 7.5%, China 6.6%,

Germany 5.4%, Russia 4%.12

9) US Trade Relations:

The volume of US and Albanian trade relations is very low, but growing. In 2006,

Albania imported $27.6 million of US products, and exported $23.9 million of Albanian products

to the US(surprisingly balanced relative to balance of payments). Overall, the US is Albania’s

17th largest trading partner. One main issue that limits the US from being a trading partner with

Albania is infrastructure. The country’s infrastructure is so poor, it literally hampers US

investment within the country.

The products the US imports from Albania ranges in importance. For example, in 2006

the US imported $11.4 million in liquid petroleum gases, $6.5 million imported of leather and

rubber materials, and $3.5 million in tea and spices(top imports among others). Petroleum

products are of more significance to the US than tea and spices. Yet, with petroleum products

being Albania’s most exported products, it is clear these products are also very important to

Albania in regards to trading.13

After reviewing imports and exports, it seems as though Albania’s importation of US

products is of more importance. The US product most imported by Albania includes measure,

testing and control products, followed by drilling and oilfield equipment. With all of the

infrastructure and energy projects occurring, it would not be possible without some of the US

equipment imported by Albania. Other important US products Albania imports includes

excavation and telecommunication products, without these growth tools the country’s

infrastructure development would be quite stagnant, therefore Albania’s imports are more

important than exports.14

10) Alliance Memberships:

• Has been a UN member since December 14, 1955

• Albania has been a WTO member since September 8, 2000



• Corridor VIII Alliance – Economic Alliance

• Agreement on Trade Facilitation and Liberalization.15

11) Important Alliances:

Albania became the 138th member of the WTO on September 8, 2000. The WTO Director-

General stated, “Membership promises a more prosperous future and raised living standards for

all Albanian citizens. I also believe that, by encouraging the trade links between countries, the

WTO can help foster greater peace, stability and development in south-eastern Europe. Albania's

membership brings this Organization ever closer to being a truly ‘World Trade Organization’.”

Albania's Minister for Economic Cooperation and Trade, Ermelinda Meksi, agreed saying “the

WTO membership presents us with a new role in the international community” and would help

bring improvement of the wellbeing and prosperity of my people.”16

The Corridor VIII Alliance is of great importance to Albania. The Corridor VIII Alliance

promotes economic development throughout the Balkan Region. The Corridor represents

economic growth and job creation for the entire area. The Corridor will link the Adriatic Sea

Ports of Durres and Vlore in Albania to the Black Sea Ports of Burgas and Varna. This will offer

great potential for development of the involved nations and to the Southern Balkans as a region.

The Agreement on Trade Facilitation and Liberalization was signed by many neighboring

countries including, Macedonia, Croatia, Bosnia-Herzegovina, Serbia-Montenegro, Rumania,

Bulgaria, Kosovo, and Moldova. The Agreement was made to develop a regional market of 65

million consumers and is also of great importance to Albania. The goals of the Agreement are to

reduce and liberalize customs, duties and other trade barriers. Through the elimination of these

barriers, the agreement aims to establish free trade areas between the participating countries over

the next 5 to 6 years.17

12) Rostow’s Stage:

This is a section that we completed last and after researching Albania it was a difficult

choice because Albania seemed to fit stage 3, because infrastructure growth rate was very

low compared to the growth of production and its rapid urbanization. However, it is

definitely not the fastest growing like China or India, therefore we are labeling the country a

stage 2 in Rostow’s stages of economic development. With Albania holding characteristics

of stages 2 & 3, Albania may be a dual economy. Characteristics of Stage 2 include being in

a state of transition with increases in production, the further development of infrastructure,

also changes in the governments stand point. Comparing that to Albania, production has

greatly increased within the country and has become one of the worlds leading shoe

producers and leather processors. In fact, Albania produces 1.2 million pairs of shoes each

month. Although the country’s infrastructure is becoming more complex, it is definitely still

developing and also is under- funded by the government. Although the country’s government

is still extremely poor, they have abolished communism demonstrating a state of transition. 18

13) Forms of Promotion:

• According the National Council of Radio and Television Albania has an estimated 257

media outlets, including 66 radio stations and 65 television stations, with 3 national and

62 local stations.

• Radio-Television of Albania – RTSH, can reach 73% of the country however its

viewership trails that of other stations.

• TVSH-Albanian Television – Another large public television station that is often accused

of advertising partiality towards the government.

• The Tirana Times – An Albanian newspaper written in the

English language. There are not a lot of advertisements in

the newspaper however there were 2 ads for BUTRINI Hotel

and BMW.

• Television and radio advertising are the most common forms

of promotion utilized in the country. The electronic media

sector in Albania has greatly increased over the last decade. Until 1995 RTSH was

Albania’s only television station. Many television and radio stations however have not

been able to fully escape Governmental control of information and advertising. 19

14) High/ Low Context Culture:

It is evident that Albania is a P-Time culture, here are some reasons why:

• Albanians have low individualism. Religion is “indifferent,” many people have very

similar views, towards many things.

• Albanians are more relationship oriented versus being information oriented.20

• Being the poorest country in Europe, time really is not seen as money, unlike M-Time


15) Gender Bias:

• Under the communist rule women had quite a fair status, the regime wanted to eliminate

gender discrimination and women were integrated into the work force.

• With the fall of communism women’s status also fell. As unemployment sky-rocketed

women lost their jobs resulting in only 16% of women working outside the home.

• Since this time there has been a resurgence of traditional values which led many Albanian

women to be the caretaker of the home. Many women also have became divorced and

resorted to prostitution, moving to Greece and Italy.21

• Muslim Albanian Women are not required to veil their faces, although they may be worn.

16) US Employee Usage:

The “Energy Field” operation will bring 4,000 jobs to the country during actual construction

and 400 are scheduled to remain as permanent jobs at the conclusion of the project. It is

undetermined as to the quantity of US employees, however, it is known that United States

services will be utilized.22

Beyond this is has been difficult finding information regarding this matter, however, we

are aware there are American workers are working there and have been for some time. For

example, in 1997 around the same time that American tourists were told to leave Albania, the US

government ordered any “nonessential” workers to leave the country immediately by commercial

airlines. Specifically 160 US workers were to leave the country, with these workers being

“nonessential,” there is the possibility that “essential” US workers stayed behind in Albania to

continue working. It was also noted there were 2,000 private US citizens in Albania at the


17) Demographics:

Population: (est. July 2006)

• 3,600,000

Age Distribution: (est. July 2006)

• 0-14 years: 24.8% ( 464,954 male/423,003 female)

• 15-65 years: 63.3% (1,214,924 male/1,158,562 female)

• 65 years + : 8.9% (148,028 male/ 172,166 female)

Rural vs. Urban:

• Since 1990, a substantial amount of Albania’s population has moved from rural to urban


 Urban: 57%

 Rural: 43%

Albania’s four largest cities and populations:

• Tirana(Capital): 600,000

• Duress: 175,000 (350,000 regional)

• Elbasan: 225,000

• Shkoder: 110,000

Population density:

• 123 poeple/km2 or 318.6 people/ sq. mi.24

18) Language:


• Albanian

Non-official -Main dialects:

• Gheg

• Tosk

 Although Albanian is predominately spoken across Albania, the Shkumbin River acts

as a dividing line for the two main dialects, where Gheg is spoken in Northern

Albania and Tosk is spoken in Southern Albania.

Other Non-official dialects:

• Greek

• Vlach( Romanian)

• Slavic ( Southern Europe)25

19) Religion:

• In 1967, under communist rule the government completely banned religion in Albania.

To avoid hostile situations many families and people voluntarily ended and gave-up

practicing their religion.

• Many people lived decades without practicing religion, it had little or no meaning in their

lives. Today religion is seen greatly indifferent by many in Albania.26

Breakdown of:

• Muslim- 70%

 Predominate religion throughout country

• Orthodox- 20%

 Mainly reside in Southern Albania

• Roman Catholic-10%

 Northern Albania27

20) Housing Styles:

Urban Styles:

• Housing mainly comprised of apartment buildings to accompany the large middle-class

found in cities (see picture, city of Duress).

Three main housing types in urban areas:

 Rented flats

 Privately owned family houses

 Cooperatively owned flats

Rural Style:

• Pre-War housing in rural areas was mostly self-built, small and made of natural stone or


• Many dwellings were completely destroyed during WWII, and that began the move

towards urban settings and also citizens immigrating mainly to Greece.

• Common to traditional houses in Albania is ground floors used for storage. In more rural

areas the ground floor may be used to house animals. The next floor up is typically the

living area of the family containing a fire place, eating area, and two to three bedrooms.

A third floor is sometimes added in urban areas for extra sleeping quarters or for

entertainment purposes. 28

21) Education:

Before the Communist rule, Albania’s illiteracy rate was as high as 85%! Schools were

scarce between WWI and WWII, and education was not very important during those times.

When the Communist Rule over took the country in 1944, the regime wanted to “wipe-out”

illiteracy. The regulations became so strict that anyone between the ages of 12 and 40 who could

not read or write, were mandated to attend classes to learn. Since these times of struggle the

country’s literacy rate has improved remarkably (Zickel, Iwaskiw, 1994). Today the overall

literacy rate in Albania is 86.5%, the male literacy rate is 93.3% and female literacy rate is

79.5%. Since the rather large population movements in the 1990’s to urban areas, education has

moved as well. Thousands of teachers moved to urban areas to follow students. In fact, the most

dramatic shifts have been a general decrease in rural school enrollment, down as much as 30%.

It seems as though education may be similar to religion in Albania in that the country went

through times where school was almost non-existent and its lack of importance is still evident.

Before 1991, there was no business education whatsoever, but that has changed. In 1991,

many countries including Italy, the United States and Germany, provided business training

grants, to promote business education and economic growth. With the country interested in

foreign business, trade and relations, the country seems to realize the importance of a savvy

business education and how it will improve their economic and social status.29

22) Environment:

Unfortunately under the reign of communism, Albania was heavily polluted and the

country still remains extremely polluted today. It has been over a decade since Albania has

emerged from communism, yet for a population today over 3.5 million there is not one waste-

water treatment plant, a sanitary landfill or toxic-waste disposal site in the country. Recently the

past has really caught up to the country. Being hopeful in joining the EU, the large amount of

pollution has acted like a hurdle the country must overcome before they can successfully join.

Albania holds high potential for the growth of Hydro-electricity (to be discussed in Natural

resources), and provides the country with an opportunity to take advantage of green power. This

will not only improve the environment and increase the use of green marketing, but may also

build economic growth in the long run. Using green marketing in Albania will not only increase

production and satisfy consumer needs and wants, but complete that objective in an

environmentally friendly way. Within the last two years the country has been researching wind

and solar power, with the high cost of solar power the country sees more potential for wind


23) Infrastructure:

• Albania is the poorest country in Europe today, its infrastructure is generally inadequate,

but is and remains a significant barrier to economic development.

• Also, Albania’s infrastructure is said to be under-funded by the government, but is

making progress with road rehabilitation and overall construction.

• Energy Infrastructure unfortunately cannot keep up with the country’s demand, but

projects are coming along. For example, increased use of hydroelectricity, and the

“energy field” project will be discussed in section 30.

• US infrastructure is much more developed than Albania’s, not only in its complexity, but

also strength. In the US you can basically get anywhere using any form of transportation.

In Albania you might have to fly to one spot, to drive to another, to catch a train or a boat

that will take you where you need to go.31

Infrastructure Statistics:

• Airports-11 total - One Heliport in Tirana

 3 paved

 8 unpaved

• Roadways- 18,000km

o Many of Albania’s roads are not only mountainous, but are in extremely poor

conditions. Every year more roads are being repaired and paved, also many new

roads are being constructed.

 7,020 km paved

 10,980 km unpaved

• Waterways- 43 km

• Marine capital goods-24 ships

 23 cargo ships

 1 foreign-owned(Turkey)

• Railways- 447 km

 Links Shkoder to Tirana, Durres, Elbasan, and many other cities.

• Pipelines-

 Gas- 339 km

 Oil- 207 km32

24) Albanian Trade Barriers:

• Tariffs- apply to almost all products imported to Albania

 15%(maximum rate)- products such as: textiles, jewelry

 Average tax rate is 13%

 0% applied to humanitarian aid, and waste processing equipment

• Import Tax- 1% tax charged on all imports

• Excise, Consumption and Luxury Taxes-

 Applied to luxury import products, such as: soft drinks, alcoholic beverages,

coffee, cigarettes, and perfumes.

o These taxes can range from 20-65 %, and are levied in addition to tariffs.

• Quotas- there are currently no quota requirements on imports to Albania

• Standards- Imports are however subject to standards and quality control, which follows

the WTO requirements.

• Possible Export Licenses.33

25) Ethnic Makeup:

The ethnic breakdown in Albania is predominately Albanian, with 95% of the population

from that background. The second largest ethnic group in Albania is Greek at 3%, followed by

2% of other ethnic groups, which include: Gypsy, Serb, Macedonian, and Bulgarian.34

26) Labor Force:

Albania’s labor force is comprised of about 1.1 million people, which does not take into

account the 352,000 emigrant workers from Italy and Greece. In recent findings agriculture

holds the highest percentage of Albanian workers at 58%. Services industry follows with 23%,

and the manufacturing industry holds 19% of workers. Although manufacturing currently holds

the lowest amount of workers in the labor force, production is rapidly expanding, and this figure

will change soon.35

27) Cultural & Social Relations with the US:

The United States and Albania share common cultural and social aspects, while at the

same time each country has their own and unique differences. Albanians are known as being

hospitable and open to strangers and tourists, and it has been known that people who live in the

states, especially in New York, are rude to strangers and tourists. However, it is also known that

people in the south have a certain “southern charm” and are hospitable as well. The culture in

the US is known for being individualistic, yielding many different cultures and sub-cultures

within the country. Albania also shares differences, for some Albanians have moved away and

returned with a different aspect of culture from living in Greece or Italy. The US has many

important icons and sees art as being important. Many Albanians also appreciate art, and many

even have favorite artists.

The US and Albania also share similarities in social aspects. Children in Albania are

raised to respect elders and recognize the father as the head of the household, these upbringings

are similar to that of the US. The two countries also share some social norms, it is common for

people in both countries to enjoy dining out whether at a café or restaurant.36

28) Natural Resources:

Albania is an interesting country in that the southern area of the country has large

resources of Petroleum, natural gas, coal and asphalt deep underground. Unlike the south the

north holds a variety of metallic content such as: Ferro-Chromium (chrome), Copper, ferronickel

and cobalt. The country also has scattered deposits of bauxite, phosphorite, gold, silver, kaolin,

magnesite, dolomite, and gypsum. Although most of Albania’s high quality chrome deposits

have been exhausted since the late 1990’s, chromium products were still Albania’s 3rd largest

export in 2005. There are huge markets for chrome products in American cities like Miami and

Atlanta (really all large cities), where chrome rims are highly desirable, making chrome an

important resource for Albania. Also, with the south having abundances of petroleum and gas,

these resources are important, and will become significant for Albania in the future.37

Due to the fact that over 70% of Albania is above sea level with large mountainous

regions, this has provided a great potential in hydroelectric power for the country. After

examining the country’s pollution level and desire to join the EU, taking advantage of

hydroelectric power may spark economic growth and increased trade with US companies if the

country succeeds in joining the EU. One possible downfall of this is droughts. In the late 1980’s

and 1990 the country dealt with severe droughts and hydro-power dried-up, and only resumed in

1991, when heavy rainfall returned. In 2004, Albania’s Prime Minister urged US investors to see

potential in Albanian natural resources, in a speech held in New York.38

29) Distribution System:

Albania’s distribution system is similar to many other countries, including that of the US.

The country markets and distributes goods using a number of methods including: merchants,

agents, middlemen, retailers and wholesalers. Although these systems are all in place, it was

noted these systems are much less sophisticated than that of the rest of Europe. One important

and interesting fact is that Albanian’s are price sensitive, and with that in mind, keeping

middlemen out of the picture to keep costs low would be one important strategy. Typically when

selling average consumer products in Albania, one agent or distributor can cover the entire

country effectively.39

30) US Investment Potential:

• Within the last few years US businesses have begun to play a major role in Albania. In

fact, in April of 2006 the US funded the largest FDI ever in Albania, $1.9 Billion on an

energy “field” that is expected when complete to provide Albania with all the power and

gas they need.

• This project is anticipating use of over $600 million in US equipment and services.

• Also, the US using the Ex-Im Bank is furthering the opportunities for FDI, providing

more business to US companies. 40

• There are several ways a US firm can got products into Albania, these include:

 Joint Ventures- Local firm already set-up, helps foreign firm

 Selling to Government- must develop relationship; US companies say they are

pressured with Kickbacks.

 Sales Channels

 Franchising/Direct Marketing- both new and growing concepts in Albania, but


• Quite interesting are some of the company names that export to Albania, some include:

 Coca-Cola/Pepsi

 P&G/Gillette

 General Electric41

31) Ultimate Consumer Products:

• We called the US Embassy in Tirana, just to talk to an Albanian. We will discuss this

more in our presentation, but wanted you to know we did this.

• Member 1:

 Product 1- Cigarettes: After discovering Albania produces a significant amount of

tobacco, it would possibly provide potential not only for our company but Albania

as well. This would be possible because we could purchase Albanian tobacco,

decreasing our import costs and tariffs, at the same time we would be boosting

revenue for Albania. Although the country is poor, utilizing the country’s tobacco

will help keep the price low for our customers, while keeping that western appeal.

 Product 2- Yoyo’s: Marketing Yoyo’s in a poor country may have potential

because Yoyo’s are a cheap form of entertainment. There also may be a large

market for our product with about 65% of the country’s population between the

ages of 15 and 65. After the product has had so much success back in the States,

our company may have a great opportunity. With discretionary income slowly

rising, but not to the point they can afford cell phones and other hand held

electronics, kids and young adults will want a form of inexpensive entertainment.

• Member 2:

 Product 3- Shampoo: When speaking to the man at the embassy, we discovered he

only washed his hair with soap maybe once every two weeks. Therefore it was

clear that shampoo has potential in the market as discretionary income slowly

rises. Beyond income rising, as people have more money they may want the

western feel of washing their hair with soap, even if bottled in small containers.

 Product 4- Credit Cards: As Albania is slowly repairing itself, people are going to

need a service that can help them. Although the country is poor, extending a line

of credit can provide not only the citizens of the country, but also the government

with the ability to strengthen the economy. Being a service there would be little

to no inventory, production costs, or transportation costs.

32) Level of Commitment for Products:

• When thinking of products we remembered that it is important to understand that

products have different levels of commitment, depending on several factors within a

country and markets within other countries.

 Product 1- Cigarettes→ We would introduce our product in an ethnocentric manner

using a western appeal to attract consumers. After time we could possibly market the

product in Greece also due to the products western appeal, perhaps making it a

regiocentric product, depending on our level of success.

 Product 2-YoYo’s→ The product would be on the geocentric level, because no matter

where the product is sold a yoyo will basically still be a yoyo. This product could be

sold on a global basis, with very little differences yoyo to yoyo.

 Product 3- Shampoo→ Regiocentric product. Northern Europeans may want and

need a different shampoo formula than Southern Europeans (difference in thickness

and oils, also difference in water types). Developing a formula to sell in one region

and not another suggests these products are modified based on consumers


 Product 4-Credit Cards→ The same service our company provides can be obtained

literally anywhere in the world, placing it a geocentric level. We label it as geocentric

because anywhere in the world we will extend credit to people we have accepted and

there will be no significant differences between the cards and interests rates in one

country versus another.

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